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Economy in Brief

U.S. Consumer Confidence Falls in October
by Tom Moeller  October 25, 2022

• Present situation assessment falls to 18-month low.

• Overall expectations reading weakens.

• Inflation expectations edge higher.

The Conference Board's Index of Consumer Confidence Index fell 4.9% during October (-8.2% y/y) to 102.5 following a 4.1% September rise to 107.8, revised from 108.0. The index was 20.5% below its most recent high of 128.9 in June 2021. A reading of 105.0 had been expected in the Action Economics Forecast Survey for October.

Consumers' views of both the current & future economic situation deteriorated this month. The Present Situation Index fell 7.5% (-4.5% y/y) to 138.9 and reversed two consecutive months of increase. The index settled at the lowest level since April of 2021. The Expectations Index weakened 1.8% (-12.2% y/y) to 78.1 this month, after rising 5.9% in September and 15.5% in August. It remained 30.1% below its recent peak in March 2021.

Consumers' assessment of current business conditions deteriorated as only 17.5% of respondents characterized them as good, the weakest reading in three months. Labor market readings showed less optimism this month. The jobs gap, representing the difference between respondents indicating that jobs are plentiful and those saying jobs are hard to get, fell to 32.5% in October, the lowest level in 18 months. Calculated by Haver Analytics, this series has a 67% correlation with the unemployment rate over the last ten years. The jobs plentiful measure fell sharply this month, also to an 18-month low. The jobs hard-to-get measure rose similarly.

A higher 19.2% of respondents felt that business conditions would get better in six months, up from a July low of 13.7%. An improved 19.8% of respondents felt there would be more jobs in six months, up from 15.1% in July. A higher 18.9% expected income to increase in six months, up from a 15.3% July low.

Inflation expectations turned up. The expected inflation rate in twelve months edged up to 7.0% in October after falling to 6.8% in September. It remained below the June high of 7.9%. The figure is higher than the 4.4% low in January 2020. A lessened 64.9% of respondents expected interest rates to rise over the next twelve months.

The share of respondents planning to buy a home within six months increased to 6.8% in October, up from a 4.5% July low. It stood at the highest level in six months and occurred even as mortgage rates rose. Those planning to buy a major appliance jumped to 49.5% of respondents in October, up from a 41.1% July low.

The Consumer Confidence data are available in Haver's CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and market expectations are in AS1REPNA.

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